BY Grace Airhule
Airtel Africa Plc has repaid $450 million worth of senior notes ahead of their 2024 maturity date, the telecom provider said on Friday.
The early repayment, made from the Group’s cash reserves, is in line with its strategy to reduce external foreign currency debt at the Group level, Airtel Africa said in a notice posted on the Nigerian Exchange Ltd website.
Senior debt, or a first lien rating, according to the Corporate Finance Institute, is money owed by a company that has claims prior to the company’s cash flow, meaning the lender sees itself grant a first-ranking claim on the property, installations or equipment of the company. in the event of the company’s failure to meet its repayment obligations.
“Following our announcement on June 22, 2022, Airtel Africa, a leading provider of telecommunications and mobile money services, present in 14 countries in Africa, today confirms the settlement of the public offering of previously announced cash purchase to repurchase up to $450 million of the $1 billion 5.35% Senior Secured Bonds due 2024 (“Bonds”) by its subsidiary Bharti Airtel International (Netherlands) BV ( “BATH”),” the telecom provider said.
“A total principal amount of $450 million of notes has been accepted for purchase for a total of $462.6 million. All bonds accepted for purchase have been canceled prior to their maturity in May 2024. The initial repayment ceiling of $300 million, as referred to in the June 22 press release, was increased on July 6, 2022 when BAIN, in its sole discretion, decided to achieve greater debt reduction through the ‘use of cash resources,’ he said.
Airtel’s decision to reduce intercompany lending is driven by increasing exposure to foreign currency debt risk.
Airtel Africa had in its 2020 financial report announced plans to sell around 4,500 telecommunications towers in five countries, including Tanzania and Madagascar, to help reduce debt by $3.5 billion and also help the company prepare for repayment of bonds. The Group had a repayment of $890 million due in May 2020.
In March 2022, when it released its latest audited accounts for the full year, Airtel had an external debt profile of over $1 billion.
In March 2022, the company redeemed its $505 million senior secured notes one year ahead of their March 2023 redemption date.